Kyodo reports that Honda Motor Co. has decided to sell its new hybrid car for around ¥1.59 million (about US$18,600), which will be the lowest price for a gasoline-electric vehicle sold in Japan, according to company sources.

The price of Honda’s new Fit compact car to be released in October will be some 300,000 yen lower than the 1.89 million yen price tag for the cheapest model of its Insight hybrid put on sale in February last year.

The move is expected to accelerate competition in the development and sale of environmentally friendly vehicles between Honda and Toyota Motor Corp., which is expected to release a new compact hybrid next year that will do more than 40 kilometers per liter [94 mpg US, 2.5 L/100km] of gasoline and have a price tag of around 1.5 million yen, analysts said.

The new Fit will feature a 1.3-liter engine and electric motor, with fuel economy of 30 km per liter (70.6 mpg US, 3.3 L/100km).